2019 State Solar Power Rankings Report

How to read the report:

The outermost ring (closest to each state label) shows the overall grades awarded the states. The inner rings represent factors contributing to the grades.

Instructions: Roll over or tap on any segment of the chart to populate the boxes below with the state's grades and 2019 solar outlook.

Factors:

Grading Scale

A

B

C

D

F

Massachusetts

1st place

Trend: 1

Massachusetts re-takes the #1 spot this year with its truly awesome solar carve-out and new SMART Solar Program that will provide incentives for the next generation of solar projects in the state. Good work this year, Massachusetts lawmakers. You earned it.

Executive Summary

Well folks, it’s time for another roundup of the best states for solar (and the worst), with a rundown of an entire year of solar policy in the good ol’ USA, as well as some pontificating about the coming year. First, and most importantly, this year represents a milestone for the solar industry, because 2019 is the year the 30% Federal Tax Credit for installing home solar will end.

Now we don’t say that just to spook you, and it comes with the caveat that the ITC will still exist in 2020 and beyond, albeit at a lower rate of reimbursement. No, we say that because this really is the beginning of the test we all knew solar would face some day: whether, given an adequate runway of broad government support to spur innovation and greatly reduce prices, solar can stand on its own.

We’re seeing signs that solar will pass that test with flying colors. In fact, given how well the industry has weathered the solar tariffs enacted by the Trump administration in early 2018, and how the costs to install just keep falling, it seems certain that solar is ready for its moment in the spotlight.

As for the election: before the voters cast their ballots, we did a write-up on some of the races we were watching closely, and though the body politic saw fit to elect only one of the most consequential candidates we listed (Steve Sisolak of Nevada), the consequences of the election may still have a positive impact on the growth of solar across the USA. A new study by Environment America shows that installing solar panels on all newly-built homes would result in a tripling of the amount of solar in the USA by 2045. We’re all for it.

No less authority than Wood Mackenzie Power and Renewables predicts that the governors elected in 5 states—Illinois, Nevada, New Mexico, Colorado, and Minnesota, will have an enormous impact on the amount of mandated solar in their state. Already, Colorado governor-elect Jared Polis has discussed the possibility of setting a 100% RPS goal for his state, and Steve Sisolak was elected on the same ballot as a successful initiative that aims for 50% renewables in Nevada.

Given the level of support for solar that exists among voters nationwide, it seems likely the US House and some state executive branches will be leading the way on crafting smart new mandates for renewable energy. Expect to see lots of news in 2019 and beyond about the Green New Deal, backed by at least 18 incoming members of congress and others already seated.

Of course the flip side of these successes are states like Georgia and Florida, where pro-solar candidates narrowly lost, and Arizona and Washington, where residents rejected a new renewables mandate and a carbon tax bill, respectively.

Other big solar stories of 2018

A lot happened this year, but perhaps nothing was more impactful than the results of solar incentive offerings. Here’s a quick rundown of what’s been going on:

Missouri utilities are now offering $.50/watt rebates across the state, but those may also disappear quickly.

Massachusetts designed and implemented its new SMART solar incentive, which will help homeowners save money on solar now that the former SREC program has ended.

New Jersey lawmakers passed an adjusted extension of its SREC program while a successor is designed.

Duke in North Carolina offered a $.60/watt rebate that was subscribed within just days of its mid-year introduction. The 2019 offer is pending.

Washington’s performance payment program was so successful, 4 years of funding was wiped out in just over one year. The program will accept final applications in February 2019.

Finally, there’s a growing awareness of the need for battery storage alongside solar panels, and the best states are incentivizing homeowners with rebates on home solar batteries. California, Maryland, and the municipal utility of Jacksonville, Florida are all in on the game, with more to come.

These and more solar incentives in states all over the country are major drivers of new solar business, and that means new small businesses, jobs, tax revenue, and all the other good things that come along with an expanding economy. Strange then, that so many of the sunniest states (looking at you #50-51 Louisiana and Alabama) seem to have such trouble mustering legislative support for the bright, clean future.

2019 Solar Power State Grades Map

2019 USA Map FINAL

It’s 2019, and the state of the Solar Power Union is… not as strong as it should be.

Installing home solar in any of the states with grades of B or better should be easy as pie and a sure thing, financially speaking. For everywhere else, it’s hit-or-miss. Some states get C grades and still manage to have decent payback, either because they get so much sun or because their electricity is more expensive.

But the grades C and below mean something—usually that the government doesn’t have its citizens’ backs. What we mean by that is, if you live in a state that gets a C or below (especially below), you might have a decent experience getting a solar system installed, but you can’t be sure the government won’t change the deal eventually.

That could mean the credit you earn from the utility company for excess solar sent to them could go down, or the property tax exemptions that exist now could end. Basically a C grade is indicative of a state with a shaky foundation of commitment to renewable energy. If a state is serious about supporting solar power, you’ll see at minimum a good RPS law and strong net metering rules.

Only one state in our rankings earns a C with a good RPS law, and that’s Maine, which offers no incentives or tax exemptions, and has been fighting a pitched battle over net metering for the better part of three years. We’re actually hopeful that Maine will improve soon, under the leadership of its new governor. Time will tell.

The bottom line is there are too many states that have too little regulation protecting consumers who want to install solar panels. With a little push in the right direction to indicate some ongoing support, we could see many of these middling states become solar power superheroes (looking at you, Florida, Arizona, South Carolina, and Georgia).

What to look for in solar power during 2019 and beyond

Well, as we said above, 2019 is going to be all about the end of the 30% Federal Solar Tax Credit. You’ll hear about it from us and others in the solar industry, but expect think-pieces from the larger media, as well. One bit of good news on that front is the Trump solar tariffs also begin their gradual reduction, and prices will continue to fall, so the effects of the end of the ITC will be muted for at least a year or two.

As for other predictions, again, a good place to look is state incentives. Illinois has a huge new direct-payment incentive that awards cash to solar system owners based on their systems’ expected energy production. That will be a game-changer in a state that has held back from some of the big-dollar incentive programs we’ve seen in similarly progressive places. NJ will likely hit the 5.1% threshold that signals the end of SRECs there before 2021, and that may mean a scramble there.

And now let’s circle back to where we all began: the 2018 elections. Look for the progressive wing of the Democratic party to really push its Green New Deal. They probably know they won’t get any of what they want in 2019, but if they get the broad strokes right and drum up some widespread support for their ideas, the GND could be central to messaging for many progressive candidates in 2020.

Governors will have a major say in how 2019 affects the solar landscape. If we see some staunch support from state Executives in key places, we could be looking at a U.S. map with 10 or more states angling for 50%+ renewables in just a couple decades, up from 6 right now. That kind of leadership could eliminate the worries about the ebbing ITC, and lead to a national landscape where a Green New Deal seems inevitable.

Factors and Methods

We analyzed 663 different data points to produce our final rankings. It wasn’t easy, but it was worth it. Take a look at the factors we rated and the weights we assigned to each:

Click on the buttons below to see more information about the three different categories (policy, incentives, and outcomes), or the the twelve different factors. Each factor has its own ranking so you can see, for example, which state has the best solar carve-out, or which has the highest energy prices.

Solar Policy Factors – 50%

Policy is one of the major categories that we use to determine how solar will fare in a state. All told, the 5 policy factors make up 50% of our weighting system. Good solar policy is like the bedrock of the future energy landscape—with a strong bunch of laws and regulations in place, you can be sure a state will be favorable for solar long into the future.

The danger here is that state laws can be repealed as control of the legislature changes from one party to another, but we’re not quite ready to analyze the political climate of every state. Instead, we judge states by what the leaders of the past and present have done to encourage renewable development, and leave it at that.

Renewable Portfolio Standards (RPS)

2018 was a good year for state Renewable Portfolio Standards, with New Jersey finally getting theirs right and Nevada voters taking the first step toward passing a 50% renewables by 2030 standard. To do that, they’ll have to vote yes again in 2020, but given the broad support solar has seen there in the past, we anticipate that will go smoothly.

On the flip side of those three victories, Arizona residents voted against a new RPS law for their state. Boo. Looking forward to 2019: who knows—maybe Alabama will surprise us and aim for 100% by 2045? Don’t hold your breath.

RPS Solar Carve-Out

2018 saw a HUGE change to one state solar carve-out, when Massachusetts DOUBLED their existing carve-out from 1,600 to 3,200 MW. The change came along with a newly-designed incentive program called the Solar Massachusetts Renewable Target (SMART) Program, which will provide about $.15 payment in addition to retail price credits for every kilowatt-hour of solar added to the grid by a system owner. The incentive is available now, so Massachusetts homeowners: walk don’t run to the nearest solar quote request form and get the ball rolling on your savings today!

Electricity Prices

How can we guarantee that solar will be a success in a state? Electricity prices are the number 1 factor. In states like New York and Massachusetts, electricity prices are so high that solar is a no-brainer, just because it starts saving you money on day 1.

Electricity prices in most states rose about a penny this year. That’s about a 4.4% increase, and it puts us back on trend after last year’s 0.87% increase. We use an estimate of 3.5% increase per year for electricity prices, based on historical data.

We draw data for our estimates from the U.S. Energy Information Administration, which publishes monthly recaps of the total energy picture in the country. At the time we pulled the data for this report, 24 states had seen increases in their electricity prices averaging $0.01/kWh. Conversely, only 2 states saw their electricity prices decrease this year: Michigan and West Virginia.

Net Metering & Feed-in tariff

The net metering crisis that could’ve happened over the past few years has been relatively muted, thanks to the tireless work of certain committed solar advocacy groups. That said, states like Michigan and Kansas have demolished their net metering rules and opened the door to all kinds of shenanigans from utility companies—demand charges, avoided cost feed-in tariffs, and “buy-all, sell-all” billing arrangements that eliminate almost all the financial benefit from solar panels.

2019 could bring big changes for South Carolina, among other places, and maybe Arkansas will move to eliminate their net metering rules. We’re hopeful for a future with nationwide net metering standards straight from FERC or some other regulatory body. For now, we keep fighting the good fight on a state-by-state basis.

Interconnection Standards

Interconnection policies and the streamlining thereof have been targeted by many in the solar industry as a major focus for future cost reductions. We’re hopeful that some kind of nationwide standards can be adopted, but given how fragmented the politics of clean energy have been, it probably won’t be happening until after 2020.

Thankfully, nobody’s taking steps backward on interconnection. As solar becomes bigger business around the country, utility companies have ample reason to continue to make it easier to hook your panels to the grid.

Solar Incentive Factors – 40%

Incentives make up another 40% of our overall weighting system. Generally, good incentives follow from good policy, but that’s not always the case. A couple of the largest utility companies in Missouri, for example, offer good rebates without much of a state RPS to go on, while there are virtually no incentives in Maine, which has one of the most aggressive RPS laws in the country.

Incentives are generally temporary monetary tools that help defray the cost of going solar and encourage people to consider solar power over other investments. Incentives are sometimes immediate, as is the case with most rebate programs. Other times, incentives are ongoing, and take the form of SREC markets tied to RPS goals, or tax credits that carry over for a number of years.

In any case, many of the most aggressive incentive programs have come and gone. And they’ve done a good job, too. Incentives are responsible for the health of the solar industry in places like Massachusetts, New Jersey, and Arizona, because they’ve served to increase competition in the marketplace and drive costs down. But there are still some fine incentive programs to be found, in states as different as Louisiana, North Carolina, and Washington. Here’s what you’ve got to look forward to for incentives in 2018:

Tax Credits

State solar tax credits didn’t change much in 2018, and it doesn’t seem likely that they will in 2019, either. The most recent news was the sad, sad ending of Oregon’s excellent solar tax credit at the end of 2017. That said, the federal solar tax credit still exists, and remains at its full 30% level for anyone who installs solar before the end of 2019. After that, the tax credit will be reduced slowly until disappearing completely after 2022.

There’s an apt metaphor for this kind of slow decline of a wonderful, bright shiny thing, but we just can’t quite come up with it.

Rebates

As incentives go, there aren’t many better for solar owners than state solar rebates. Saving more money as soon as possible is always preferable to deferred payments or small credits over time. After all, a bird in the hand gets the early worm, right?

The biggest news in solar rebates for 2019 is Duke’s North Carolina offering. Whether it comes back as strong as it did in 2018 will determine the financial viability of home solar in the Tarheel State. The second state with excellent new rebates is Missouri, with $.50/watt available almost statewide. That’s a huge number now that average solar costs are closer to $3 than $4, equal to over 15% of our estimated average installed costs.

Considering some people feel good when they get 15% off their breakfast cereal, think of how good you’ll feel getting 15% off your multi-thousand-dollar purchase of qualified energy property!

Performance Payments

Okay, just above we said rebates are the best solar incentives, but darn it if SRECs and other kinds of Solar Performance Payments aren’t trying their hardest to win this battle! SREC programs in places like New Jersey and Washington D.C. have been WILDLY successful in building the kind of solar landscape necessary for projects both huge and tiny to thrive.

For 2019, look for the SREC program in New Jersey to keep going strong (but not much longer than that). And the new SMART program in Massachusetts is already proving to be as popular as it is well-designed. On top of that, Illinois has a newly AMAZING performance payment program that works more like a rebate, in that solar owners get paid up-front for all the generation expected of their systems in the first 10 years of operation. That’s a great deal, considering the reliability of solar, but beware that you’re on the hook for any shortages if your system doesn’t produce up to expectations.

Property Tax Exemptions

There have been no appreciable changes to property tax exemptions in the country as we head into 2019. That’s good, but not good enough. You see, there are 29 states up there with property tax exemptions that earn less than an “A” grade. Ideally, we’d like to see everyone earn the highest possible grade, but we’ll start with wishing those 18 states without any property tax exemption get their acts together and pass something, stat.

May we suggest everyone adopts rules that ensure 100% of all newly-built homes come with solar, and also exempt those homes from additional property taxes as well?

Sales Tax Exemptions

Ditto the lack of change in the sales tax exemption outlook. In this case, there are 18 states without any sales tax exemption for solar purchases, which we’d love to see fixed as quickly as possible. Notice again how every one of the states that earned an “A” overall have sales and property tax exemptions for solar panels? That’s the kind of leadership all states can look to.

Outcome Measurement Factors – 10%

The final two factors are described as “outcome measurements,” because that’s exactly what they are. If a state has a good RPS, high electricity costs, and decent rebates, you’d expect these outcomes to follow. That doesn’t always happen, but more and more, it holds true.

Sometimes, states with bad laws still allow for people to make money with solar, as is the case in sunny Texas and Utah. Sometimes, states do well for any number of reasons our other analysis didn’t capture, so we added some weight to these outcomes to reward states that go against the odds. 10% of weight, to be exact, distributed evenly to the 2 factors.

A note about system size and outcome

We actually made some pretty substantial changes to outcomes this year, as well, by moving away from a one-size-fits-all approach when it comes to system sizing. We used to say “the average home needs a 5-kW solar system,” but that number depends on how much electricity your home needs, which varies greatly by where you live.

See, different states have different usage patterns—some places use a lot of natural gas for heating and cooking, while others use almost exclusively electric power. Some places get a lot of sun, while others see more clouds and rain. And some place have crappy net metering rules, meaning you wouldn’t want to make your system big enough to feed excess electricity in to the grid, instead opting for a smaller system that won’t overproduce during sunny months.

This year, we looked at data from the U.S. Energy Information Administration (EIA), about average electricity consumption by state. Then we matched that consumption to how much sun a place gets (aka “insolation”) and calculated the average solar panel system size necessary to produce the average household electricity needs for each state.

The result of all this re-jiggering is that our estimates show some places need 11.2-kW systems to make the average needs of homes in their state, while others need 4-kW systems to do the same. This means people won’t all be spending around the same amount on a system, but the payback time and IRR of solar investments are being compared on more of a real-world playing field.

Of course, every home is unique, and what’s right for the average home in your state might not be right for you. It’s always best to get multiple quotes for solar if you’re interested in learning how solar panel system can save you money.

System Payback Time

Average system payback in this brave new world of average system size calculations has gone down from 12.8 to 11.4 years. That’s also reflected in the number of states that receive an A grade for average payback (under 10 years), which increased from 11 states to 14 for 2019. The number of states receiving a B (10 to 11 years) also increased, from 8 to 12.

That’s such good news for millions of people around the country. Your solar panels are now guaranteed to last more than twice as long as it takes for them to pay off their cost and start making you money!

Internal Rate of Return

There was a similar improvement in rate of return across the board, with our estimates now showing an average of 10.7% IRR for solar investments, up from 9.4% for 2018. That’s more great news, because at an average of 10.7%, an investment in solar power beats the stock market by over 37% (7.8% avg return for long term investments in the S&P 500).

Moreover, the number of states in which an investment in an average-sized home solar system beats the stock market has grown to 31, up from 22 the year before. That’s a huge number, and really reflective of how far we as a nation come in getting up-front costs down and maintaining good, smart incentive programs and state solar policy that continue to drive positive growth!

On that note, let’s end this thing. Now go out into the world and shout the good news from the rooftops: the age of solar energy is well and truly underway!

Thanks for the comment, Jeff, and you’re right, on its face, grading high electricity prices well seems like a bit of cognitive dissonance, but there’s a couple reasons we do it:

Yes, high electricity prices mean homeowners save more with solar. Because we’re focused on state rankings for friendliness to homeowners’ savings, we gotta think of that audience first

The reasons why electricity is expensive; Usually really high electricity prices means a lot of imported energy. In the case of Hawaii, this literally means giant tanker ships full of fuel oil, which is the worst kind of fuel source from an emissions standpoint, but one of the most stable to transport and store over long distances. In other places, it could mean a lot of electricity purchased from out of state, as is the case in California and the northeast. This means various things, including energy losses from transmission and inefficient management of the larger transmission/distribution infrastructure, which means local solar energy has a much greater impact there than in other places in eliminating those inefficiencies in the current system.

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